Consider first Friedman’s erroneous belief that shareholders “own” corporations. Although laymen sometimes have difficulty understanding the point, corporations are legal entities that own themselves, just as human entities own themselves. What shareholders own are shares, a type of contact between the shareholder and the legal entity that gives shareholders limited legal rights. In this regard, shareholders stand on equal footing with the corporation’s bondholders, suppliers, and employees, all of whom also enter contracts with the firm that give them limited legal rights.
As other commenters have pointed out, you don’t have to choose to invest in Meta to find yourself a Meta shareholder, or at least holder of shares in another entity that does hold Meta shares.
This seems to be nonsensical splitting of hairs. While shareholders do not technically own the corporation directly they can and will perform functions like shutting down a corporation. While the day to day operations is conducted by the board of directors they answer to the shareholders.
Shareholders are the legal owners of a corporation, while the board of directors is the governing body elected by those shareholders to oversee company leadership.
Furthermore, saying shareholders stand on equal footing with the corporation’s bondholders, suppliers, and employees is absolutely nonsense unless they themselves are also shareholders. While this may be technically true in some respects the reality is quite a bit different. This argument completely falls apart under many common circumstances.
There is also a big difference between minority and majority shareholders with the minority (often employees) being mostly ignored.
While shareholders do not technically own the corporation directly … Shareholders are the legal owners of a corporation
It seems to me you’re trying to have it both ways.
saying shareholders stand on equal footing with the corporation’s bondholders, suppliers, and employees is absolutely nonsense
I read this to mean that everyone in those groups has some kind of contractual understanding with the corporation, and none of them have property rights. That the shareholders aren’t, legally speaking, special.
It is a legal thing, shareholders own the corporation, but not the companies physical assets. So a shareholder couldn’t walk into a business and take something and say “I own this”. They can however vote to close a corporation or fire the board and form a new one.
The shareholders legally are special, but it doesn’t always work in their favor. For instance, they are the last to be paid.
I am no expert, but I have been an Executive Director in the past. I was just talking about the concept, which as you can tell, is pretty complex.
I’m new to these facts myself, but:
– The Dumbest Business Idea Ever. The Myth of Maximizing Shareholder Value, By Lynn Stout
As other commenters have pointed out, you don’t have to choose to invest in Meta to find yourself a Meta shareholder, or at least holder of shares in another entity that does hold Meta shares.
This seems to be nonsensical splitting of hairs. While shareholders do not technically own the corporation directly they can and will perform functions like shutting down a corporation. While the day to day operations is conducted by the board of directors they answer to the shareholders.
Shareholders are the legal owners of a corporation, while the board of directors is the governing body elected by those shareholders to oversee company leadership.
Furthermore, saying shareholders stand on equal footing with the corporation’s bondholders, suppliers, and employees is absolutely nonsense unless they themselves are also shareholders. While this may be technically true in some respects the reality is quite a bit different. This argument completely falls apart under many common circumstances.
There is also a big difference between minority and majority shareholders with the minority (often employees) being mostly ignored.
It seems to me you’re trying to have it both ways.
I read this to mean that everyone in those groups has some kind of contractual understanding with the corporation, and none of them have property rights. That the shareholders aren’t, legally speaking, special.
I’m just some rube on the internet. I’m not really in a position to argue the fine points of corporate law. The author of this article, though, was.
It is a legal thing, shareholders own the corporation, but not the companies physical assets. So a shareholder couldn’t walk into a business and take something and say “I own this”. They can however vote to close a corporation or fire the board and form a new one.
The shareholders legally are special, but it doesn’t always work in their favor. For instance, they are the last to be paid.
I am no expert, but I have been an Executive Director in the past. I was just talking about the concept, which as you can tell, is pretty complex.